Philadelphia Moves Closer to Fiscal Relief

HARRISBURG, September 17, 2009 – After weeks of an uncertain fiscal future the City of Philadelphia moves closer to relief thanks to approval in the Senate of legislation that would allow Philadelphia to address its budget crisis, according to state Sen. Larry Farnese (D-Phila.) The Senate Philadelphia delegation voted unanimously in favor of the bill.

“Philadelphia has faced most dire fiscal distress that has threatened city services, jobs and the welfare of its citizens,” Farnese said. “It was a long time coming, but the city is close to being granted the tools to get them on the road to economic recovery.”

House Bill 1828 would give the city the authority to raise its sales tax by 1 percent for five years and restructure the city’s pension plan system by deferring payments for two years, with the city repaying it at 8.5 percent interest. If the city does not make the repayments, the state will withhold funding and institute penalties.

The bill also allows other municipalities across the state to restructure their pension systems. It also instills guidelines for municipalities that choose to implement Deferred Retirement Option Program (DROP), while banning elected officials from participating in this program.

Farnese pushed to ensure that language eliminating DROP for future elected officials became a part of the amendment to House Bill 1828.

“Oversight and fiscal responsibility are the key tools to ensuring financial success of any city,” Farnese said. “The provisions in this bill provide a way to help City Council keep Philadelphia on the path of fiscal health through pension and economic reforms.”

Philadelphia Mayor Michael Nutter has predicted dire fiscal consequences if this measure is not enacted, including the reduction of services, the layoffs of hundreds of firefighters and police officers and closings of all libraries and recreation centers.

“My colleagues in the Philadelphia delegation and I have fought hard to see that Philadelphia is equipped with the necessary tools to finally gain fiscal relief and I am pleased to see this process move forward,” Farnese said.

After several amendments were added by both the Senate and the House, the legislation finally came together in a form that addressed the fiscal needs of municipalities throughout Pennsylvania.

The bill now goes to the governor.

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